Blended Finance

Blended finance has become a dominant paradigm in development and environmental finance over the last 15 years. The main idea is that scarce public resources will never be sufficient to achieve critical social and environmental aims, so private capital must be attracted to fill the gaps. Using financial mechanisms that reduce investor risk while boosting their profits, the blended finance approach has grown alongside the huge increase in Global South debt. The growth of blended finance is troubling, but shows no sign of slowing down at critical international institutions.

• Many multilateral development banks and Global North countries’ bilateral aid and development agencies have adopted blended financial structures as key parts of their toolkit; the World Bank has played a central role in this shift toward Development actors acting as heralds of capital. 
• The deployment of blended finance approaches ballooned alongside the surging growth in Global South debt that has become a humanitarian and ecological crisis.